He was born to a family of farmers from Bhimavaram, near the city of Vijayawada in Andhra Pradesh. His father moved to Hyderabad in the 1960’s to start a textile business and buy more land for farming. It was here that Byrajju Ramalinga Raju became Hyderabad’s most celebrated son, having created one of India’s largest IT players, Satyam Computer Services Ltd.

A lover of science fiction – particularly those of Isaac Asimov and Arthur C. Clarke, Ramamlinga Raju will forever go down in the pages of Indian business history as the perpetrator of one of India’s biggest corporate frauds. Rather ironic that Satyam, which means “truth”, has been reduced to a common vagabond cowering behind a tissue of lies.

On January 7, 2009, India faced its Enron when Ramalinga Raju admitted to having inflated company profits by 50.4 billion rupees over the past seven years, causing the company’s stock to plummet by more than 6o percent.

Raju has maintained throughout his confession, that the goal was never personal profit and the Board of Directors had no idea of what was going on. One does wonder though, how is it that the internal and external audits never caught the scam, especially since Satyam was showing a balance of just over Rs. 7,000 crores – an amount big enough to feed several small nations. Who were the people working on these figures?

The auditing firm of Pricewaterhouse Coopers (PwC), who had maintained a low profile so far, has been suddenly thrown into the limelight with the CID raiding their offices on the night of January 13, 2009. They have since admitted that their data was gathered by confidence placed “on management controls and the verbal and written representations made to us during our audits.” At whose behest did they not press for more disclosures?

“The company had to carry additional resources and assets to justify a higher level of operations, thereby significantly increasing costs,” Raju said in his confessional letter. The planned, and now aborted, buy out of property development firm, Maytas was the last attempt at trying “to fill the fictitious assets with real ones.”

Satyam had valued Maytas at about Rs. 8,000 crores, an amount that was hugely inflated, and at the investors asking awkward questions, Raju withdrew the proposition. Had the deal gone through, the Rs. 5,906 crores of over-stated bank balance, accrued interest and debtors, would have funded the transaction. The balance Rs. 2,100 crores would have paid out the rest of the public and institutional shareholders of Maytas as well as the Raju family.

The above stated facts contradict everything that Raju’s confession of not wanting personal profit claimed, because this confession itself benefits Raju’s family, especially his sons who run Maytas, since the company already owns the physical assets.

The questions that have gone unanswered are that how did the bank balance show the amount that it did, when it never existed or was it possibly scammed away? How is it that the other Directors never questioned the financial statements? Were they never discussed in the Boardroom? What was the role of the independent Directors, whose sole purpose is to monitor how the company functions? And if the Board of Directors were indeed ignorant of the financial discrepancies, how did the Rs. 8,000 crore Maytas sanction come through in just one day?

The answers to these damning questions are ones that will reveal a clearer picture of the snake-headed Medusa that plagues the Indian economy today. The answers to these damning questions are probably going to be something that investors and share-holders would at once want to hear and want to ignore, because of the ramifications that they will bring with them. The one thing that is clear is that Raju’s confessions haven’t come from a genuine, if sudden, attack of paralyzing guilt. It has come at a time where after eight years, further deception had become impossible.

Nasscom, India’s IT trade organisation which is responsible for uniform public policies regarding software and services, released a statement via a spokesperson saying, “This is a standalone case of a failure of corporate governance, and it is critical that it be viewed in this light. This is not in any manner a reflection on the industry or corporate India.”

With the IT sector already reeling from the aftershocks of the Satyam earthquake, isn’t this setting us up for other such nasty surprises? Wouldn’t it be better if instead of making such statements, a new policy is formed, making auditors liable by introducing stringent checks and balances to arrest such rogue behaviour?

Saurabh Mukherjea, head of Indian Equities, at Noble, a London-based investment bank says that in the recent years, he has found at least 10 companies in the BSE 500 that have the makings of yet another Satyam, by “shifting expenses away from the current period and significantly reducing depreciation rates.” At least 15 companies have “disbursed the bulk of their loans and advances to companies in which Directors have an interest.” The statement from Nasscom hardly reflects a will to tackle this problem.

The Indian Express, a national daily, summed the fiasco up by saying, “The timing could not have been worse. We are less than a fortnight away from the inauguration of the least globalization-friendly American president in decades. At the cusp of a possible attitudinal shift in US policy towards off-shoring, the collapse of one of the biggest Indian outsourcing companies amid allegations of ethical breaches is simply catastrophic.”

In damage-control mode, the Indian government has installed three leading businessmen to the Board of Satyam Computer Services Ltd., now under Ram Mynampati, and more recently, had Raju arrested. The Satyam subsidiaries; Maytas Properties, Satyam BPO, Satyam Venture Engineering Services, etc., are under the government scanner and will be inspected under provisions made in Section 209A of the Companies Act. ISB Dean, M. Rammohan Rao has already stepped down as Dean, resigned from the RBI Deputy Governors’ Selection Committee and from the selection panel of the Chairman of the SEBI, owning moral responsibility.

But what about the two Satyam bosses apart from Ram Mynampati, a U.S. Citizen, who have left the country? Virendra Agarwal has left for Singapore and Director, Keshub Panda, has removed himself to London supposedly to tame the ruffled feathers of their clients. But the possibility of wanting to escape from the police and other regulatory authorities can hardly be ignored. Why was nothing put in place to stall the movement of individuals directly related to the management until the questioning had been over and done with?

While the rumours abound that the Government is going to put together a bail-out package of Rs. 2,000 crores, Kiran Karnik has been quoted as saying, “Taking money from the Government will send a wrong signal.” While it is most important that the human angle of this financial fiasco needs to be minimised by assuring the 50,000-odd Satyam employees that their jobs will not be in jeopardy, I hardly think offering the tax payers hard earned money to a private company that has been conning its domestic and international clients is the right way to do so.

Apart from this, a simple regulatory change would ensure better ethics in corporate India. Clause 49 of the Indian Listing Agreement, which deals with the role of independent Directors assumes “that not being related to a promoter or having a direct economic benefit from a company, makes a director independent.” It ignores the fact that many of these independent Directors, eminent personalities in their own right, some having been CEO’s in the past, are considerate towards the management and hence, lack objectivity. The amount of independence invested in them needs to be re-verified.

From the surprising facts that have come to light, the bottom line seems to be that businesses today are only concerned with generating profit, revenue and showing a year-on-year, quarter-on-quarter growth. But what needs to be seen is the cost and repercussion of this growth. The political and bureaucratic system is full of loopholes, the biggest being the politicos unquenchable greed, that the corporates’ have used to their advantage. It is essential that a stronger board than the SEBI and Nasscom be set up and random checks be done by them to ensure that others like Ramalinga Raju, the man who decided to “ride the tiger”, but wilfully blinded himself to the consequences of messing with wildlife, do not poach Indian business.